Sierra Madre Gold and Silver (TSXV: SM; US-OTC: SMDRF) started operations at its Coloso mine in central Mexico on Tuesday. This comes four months after it resumed commercial operations at the nearby Guitarra Complex mine and mill in January.The milestone was achieved seven months early with minimal investment by reactivating 12 km of workings acquired from First Majestic Silver (TSX, NYSE: AG). Mining kicked off at 50 tonnes per day and will rise to 150 tonnes per day by the end of December, replacing feed now sourced from Guitarra’s 500-tonne per day plant. Guitarra and Coloso are located about 200 km west of Mexico City.“This marks another milestone event in the restart of the Guitarra Mine Complex,” COO Greg Liller said in a release.Silver centreHistorically a major silver producer, Mexico produced 204.8 million oz. silver in 2023. That accounts for about 24.8% of the world’s silver output, according to the U.S. Geological Survey. The country attracted around $5 billion in mining investments last year. Major companies are focusing on expansions due to stricter rules on concessions and water permits, though other companies have reported progress in securing some permits.Fresnillo (LSE: FRES) and MAG Silver (TSX, NYSE-A: MAG) increased output at their Juanicipio joint venture in Zacatecas. Pan American Silver (TSX, NYSE: PAAS) is expanding La Colorada in Sonora. Coeur Mining (NYSE: CDE) finished a $1.7 billion takeover of Silvercrest in February. Also, First Majestic bought Gatos Silver for $970 million in March.Regulators have raised environmental standards: Sierra Madre secured dry-stack tailings and paste backfill permits in May last year. The permits got approved, even as government discussions about increasing royalties and a possible open-pit ban under President Claudia Sheinbaum took place.Sierra Madre shares trading in Toronto added 3.5% or C2¢ per share to C59¢, solidifying 12-month gains higher than 51%. It has a market capitalization of C$90.8 million ($65.6m).Guitarra ramp-upGrades at Coloso are about 1.7 times higher in silver and 1.2 times higher in gold compared to the Guitarra veins, Liller said. The widths of the veins range from less than 1 metre to over 2 metres. Ramp-up mining will thus use different methods and blasting techniques. This helps find the best mix of mining costs and grade dilution.Plan map of the Guitarra Complex in central Mexico.Coloso hosts 432,000 indicated tonnes grading 221 grams silver per tonne and 1.61 grams gold, compared with Guitarra’s 1.7 million indicated tonnes at 123 grams silver and 1.3 grams gold.The company began Guitarra operations on the Jessica vein and at Joya Larga. They are to test mining and blasting methods to find the best cost-to-grade ratio.Refining operationsSierra Madre hired a metallurgist with significant flotation experiencewho is to work as the process plant superintendent for processing at Coloso.“Their goal will be to determine the best ratio of Coloso to Guitarra mill feed material to achieve maximum economic benefit,” Liller added.Guitarra’s test-mining program generated $3.9 million in revenues during the three months ended Dec. 31, while milling 38,464 dry tonnes at 84% gold and 79% silver recoveries. Full-year revenues reached $6.5 million and gross profit hit $1.36 million before Guitarra achieved commercial rates on Jan. 1.
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